Anna 
The British Pound (GBP) retained its recent gains on Thursday, with market attention fixed on the upcoming Bank of England (BOE) interest rate decision, widely anticipated to maintain the status quo at 5.25%. GBP/USD experienced a strong rebound on Wednesday, driven by improved market sentiment following the Federal Reserve’s (Fed) decision to stabilize interest rates within a range of 5.25%-5.50%.
The United Kingdom’s economic landscape presents a challenging terrain, characterized by weak retail demand, concerning business data, a fragile housing sector, and a deteriorating labor market. These prevailing conditions may influence the BOE to opt for a conservative monetary policy, choosing to leave interest rates unchanged. Further rate hikes at this juncture could exacerbate economic concerns, potentially pushing the nation into a recession.
A judicious decision by the Bank of England may serve as a safeguard against additional damage to the UK’s economic outlook. However, this strategy also brings the risk of upward pressure on consumer inflation. Despite the UK’s history of raising interest rates, the nation’s inflation rate remains stubbornly above the 6% mark. Furthermore, escalating tensions in the Middle East add a layer of complexity, introducing potential threats to efforts aimed at curbing inflation to the 2% target, particularly as oil supplies face the prospect of tightening, potentially driving energy prices higher once again.
